] HipMojo.com » Google’s Paypal Killer: Avoid MySpace and YouTube Scenarios

Google’s Paypal Killer: Avoid MySpace and YouTube Scenarios

Just because eBay is no longer in the top of mind category of Web leaders does not mean that it’s not a company in a position of market leadership.  These days, the Web space is going ga-ga over online video and social networking, hence the YouTube and Myspace reference in the title of this article.

But, the fact remains: eBay is a $40 billion company that is on top of the commerce space online.  Clearly, Google has beaten Yahoo! in search.  It’s also beaten - through acquisition - others in video.  Independent of how it will position YouTube vis-a-vis Google Video, Google’s aggressive push onto eBay’s turf and doubling up of efforts by making it free versus eBay’s Paypal shows that Mountain View is looking ahead.

Sure, online video and social networking is hot, but transactions and ecommerce are only poised to grow over time.  That’s not a shocking statement in itself, but the fact that Google is willing to subsidize its attack on Paypal by making it free shows that Google is taking the threat from startups like Turn seriously (Turn is a CPA model).

Google is learning from lessons: it has yet to gain any traction in the CPM space (enter the acquisition of YouTube, perhaps?) and it knows that it needs to diversify away from its current CPC pricing model into CPA because all factors being equal, advertisers will favor CPA ad buys over CPC.

Google was late in recognizing social networking’s long term traction, it did not buy MySpace but subsequently had to pay $900 million for MySpace’s ad inventory.  Ditto YouTube, though it learned from passing up on MySpace and bought it outright 18 months after launching.

Whether or not Google’s latest push makes a difference remains to be seen: its “Paypal killer” failed to gain traction upon launch, but with the holiday season here, it’s showtime for the $140 billion search leader.

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Posted By: Ashkan Karbasfrooshan | Nov 11th

3 Responses to “Google’s Paypal Killer: Avoid MySpace and YouTube Scenarios”

  1. Bruce Wagner Says:
    November 11th, 2006 at 10:49 pm

    Call me slow….

    But I don’t get it.

    How is YouTube a “Paypal killer”…?

    They’re two completely different things.

  2. froosh Says:
    November 11th, 2006 at 11:01 pm

    YouTube is not a Paypal killer, so you are certainly not slow.

    I brought up YouTube and MySpace as examples of Google not wanting to wait until it’s too late. Google missed out on buying MySpace and had to go out and pay FIM - who bought MySpace - $900 million in an ad deal in a defensive move against Yahoo! and MSFT.

    With YouTube, it learned not to let a company get too large before a) striking an exclusive ad deal or b) buying it. With YouTube it went with a) - buying it.

    In the context of e-commerce, it need not buy a company in the space (though it could, much the same it bought YouTube after launching Google Video and failing to gain traction) since it owns a payment system in Google Checkout.

    So my reason for bringing up YouTube and MySpace was to suggest that Google has learned to act aggressively before it’s too late (ie. expensive) to do so.

  3. Bruce Wagner Says:
    November 12th, 2006 at 1:44 am

    Ahh… Now I get it.

    Thanks for explaining…

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